[Federal Register Volume 74, Number 3 (Tuesday, January 6, 2009)]
[Notices]
[Pages 482-483]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-31351]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59171; File No. SR-ISE-2008-9]


Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Fee Changes

December 29, 2008.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 23, 2008, the International Securities Exchange, LLC 
(the ``Exchange'' or the ``ISE'') filed with the Securities and 
Exchange Commission the proposed rule change, as described in Items I, 
II, and III below, which items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The ISE is proposing to amend its Schedule of Fees to establish 
fees for transactions in options on one Premium Product.\3\ The text of 
the proposed rule change is available on the Exchange's Web site 
(http://www.ise.com), at the principal office of the Exchange, and at 
the Commission's Public Reference Room.
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    \3\ Premium Products is defined in the Schedule of Fees as the 
products enumerated therein.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in sections A, B and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    1. Purpose--The Exchange is proposing to amend its Schedule of Fees 
to establish fees for transactions in options on the NASDAQ Q-50 Index 
(``NXTQ'').\4\ All of the applicable fees covered by this filing are 
identical to fees charged by the Exchange for all other Premium 
Products. Specifically, the Exchange is proposing to adopt an execution 
fee for all transactions in options on NXTQ.\5\ The amount of the 
execution fee for products covered by this filing shall be $0.18 per 
contract for all Public Customer Orders \6\ and $0.20 per contract for 
all Firm Proprietary orders. The amount of the execution fee for all 
ISE Market Maker transactions shall be equal to the execution fee 
currently charged by the Exchange for ISE Market Maker transactions in 
equity options.\7\ Finally, the amount of the execution fee for all 
non-ISE Market Maker transactions shall be $0.45 per contract.\8\
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    \4\ The Exchange represents that NXTQ is eligible for options 
trading because it meets the standards of ISE Rule 2002(d), which 
allows the ISE to begin trading this product by filing Form 19b-4(e) 
at least five business days after commencement of trading pursuant 
to Rule 19b-4(e) of the Act.
    \5\ These fees will be charged only to Exchange members. Under a 
pilot program that is set to expire on July 31, 2009, these fees 
will also be charged to Linkage Principal Orders (``Linkage P 
Orders'') and Linkage Principal Acting as Agent Orders (``Linkage P/
A Orders''). The amount of the execution fee charged by the Exchange 
for Linkage P Orders and Linkage P/A Orders is $0.24 per contract 
side and $0.15 per contract side, respectively. See Securities 
Exchange Act Release No. 58143 (July 11, 2008), 73 FR 41388 (July 
18, 2008) (SR-ISE-2008-52).
    \6\ Public Customer Order is defined in Exchange Rule 100(a)(39) 
as an order for the account of a Public Customer. Public Customer is 
defined in Exchange Rule 100(a)(38) as a person or entity that is 
not a broker or dealer in securities.
    \7\ The Exchange applies a sliding scale, between $0.01 and 
$0.18 per contract side, based on the number of contracts an ISE 
market maker trades in a month.
    \8\ The amount of the execution fee for non-ISE Market Maker 
transactions executed in the Exchange's Facilitation and 
Solicitation Mechanisms is $0.19 per contract.
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    Additionally, the Exchange has entered into a license agreement 
with The NASDAQ OMX Group, Inc. in connection with the listing and 
trading of options on NXTQ. As with certain other licensed options, to 
defray the licensing costs, the Exchange is adopting a surcharge fee of 
two (2) cents per contract for trading in options on NXTQ. The Exchange 
believes charging the participants that trade this instrument is the 
most equitable means of recovering the costs of the license. However, 
because of competitive pressures in the industry, the Exchange proposes 
to exclude Public Customer Orders from this surcharge fee. Accordingly, 
this surcharge fee will only be charged to Exchange members with 
respect to non-Public Customer Orders (e.g., ISE Market Maker, non-ISE 
Market Maker & Firm Proprietary orders) and Linkage Orders. Finally, 
since options on NXTQ are not multiply-listed, the Payment for Order 
Flow fee shall not apply. The Exchange believes the proposed rule 
change will further ISE's goal of introducing new products to the 
marketplace that are competitively priced.
    2. Basis--The Exchange believes that the proposed rule change is 
consistent with the objectives of Section 6 of the

[[Page 483]]

Act,\9\ in general, and furthers the objectives of section 6(b)(4),\10\ 
in particular, in that it is designed to provide for the equitable 
allocation of reasonable dues, fees and other charges among its members 
and other persons using its facilities.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to section 
19(b)(3) of the Act \11\ and Rule 19b-4(f)(2) \12\ thereunder. At any 
time within 60 days of the filing of such proposed rule change, the 
Commission may summarily abrogate such rule change if it appears to the 
Commission that such action is necessary or appropriate in the public 
interest, for the protection of investors, or otherwise in furtherance 
of the purposes of the Act.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File No. SR-ISE-2008-98 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-ISE-2008-98. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the ISE. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-ISE-2008-98 and should be 
submitted by January 26, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-31351 Filed 1-5-09; 8:45 am]
BILLING CODE 8011-01-P